How To Be Investor Ready

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How To Be Investor Ready

Are you a small business owner looking for capital? A business plan is an essential tool for companies that are looking to raise capital. Approaching investors unprepared is one of the top reasons why entrepreneurs are unable to get their business off the ground. Investors meet with entrepreneurs and see business plans every day. It’s up to you to wow them with your business plan, strategic goals and investor ready financials.

Here are some ways you can help your business be investor ready:

Tell Your Story

While numbers and discipline are important at this stage, telling your company’s story will be your strongest tool in selling investors. Show your passion! People want to see your commitment to and excitement for your idea. As much as investors are investing in your company, they’re also investing in you.

Involve your company’s upper management in your story as well. Your collective knowledge and experience will help persuade investors that you’re in it for the long-haul.

Know Your Market

Knowledge of your market and customers are persuasive points you can share with investors. While an idea might be great, if you haven’t researched who will be buying it, you’ll never win over the hearts and wallets of strong investors.

Outline your target audience, market size, demographics and growth prospects. Investing a bit of money into professional market research can end up transforming your business plan.

Maintain Steady Bookkeeping

Many entrepreneurs fail to see the importance of well-maintained bookkeeping from day one. When your business is still small, it’s easy to let things slip. Avoid a mad dash to prepare your financial statements by maintaining solid bookkeeping from the start. Having organized financial data will also help you to prepare cash flow projections.

Prepare Realistic Financial Projections

“Realistic” being the key word here. While you’ll want to impress investors with your ability for growth, your projections should be realistic for what your company is capable of. You’ll want to include a clear idea of the valuation of the business, the equity available for the investor and a potential exit strategy for the investor.

Make sure your excel spreadsheet works! This may seem obvious, but you’d be surprised by how many investors find inaccuracies in financial calculations. Now would be an ideal time to have an expert review your financial projections, and if you’ve maintained up-to-date bookkeeping, you’ll save yourself time and money.

Be Ready For Questions

Consider your audience and who you are trying to sell your idea to. Are you pitching to an angel investor? A venture capitalist firm? A bank? You’ll want to tailor your pitch each time.

Be prepared to answer questions regarding where investor money will be going in a detailed use of funds statement. These forward-thinking numbers show investors that you’re confident in your business, but are capable of planning for anything.

Investors will be testing your numbers, but also testing your character. Raising capital is almost like a job interview - you’ll be asked to prove yourself again and again. While it’s important to sing the praises of your business or idea, it’s equally important to be honest. With the right investor, you’re building a long-term relationship - you’ll want it to be built on mutual trust.

I’m Funded! Now What?

The sudden influx of investor money can bring out the green-eyed monster in all of us. When you’ve worked hard and spent your own money building up your business, it can be tempting to see investor money as a gift and spend it on things like lavish office spaces and fancy new tech. Burning through investor money too quickly is a fast and easy way to watch your startup flop! Maintain reasonable overhead costs, and track what you’re spending and where.

Are you looking to get your books in order so that you can raise capital? Enkel can help. We’re experienced in guiding entrepreneurs through setting up accurate, investor-ready bookkeeping systems. Let’s talk! We’d love to show you how we can help your business grow.

Omar Visram
About Omar Visram
Omar Visram is the Co-founder and CEO of Enkel Backoffice Solutions Inc. Headquartered in Vancouver, Enkel provides bookkeeping, payroll, accounts payable and accounts receivable services to over 200 organizations Canada-wide.